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Abstract

Dairy marketing cooperatives provide marketwide services, such as lobbying for
higher support prices and negotiating for premiums above marketing order prices, which
benefit all dairy farmers in the market. The presence of free riders, people who benefit
from these marketwide services without paying any of the costs of these services, can
jeopardize the existence of the cooperative. Understanding why members were attracted
to the cooperative and why independents (non-members) were attracted to the investor oriented
firm (IOF) allows cooperatives to target specific membership groups.

Depending on the cooperative's goals, management can then use this information to focus
on either retaining current members or attracting new members or both.
The purpose of this study is to produce practical recommendations for dairy
marketing cooperatives for recruitment and retention of members. This study begins
with a background on cooperatives and a conceptual framework based on group and game
theory. The data are a result of a regional survey of dairy farmers. The data are then
analyzed using t-tests for continuous responses and chi-square tests for categorical
responses. This analysis results in a comparison of responses from cooperative members
and independents.

The independents stressed immediate benefits over long-run gains. Independents also
appeared to have a risk/return trade-off. They received higher prices in exchange for
fewer written contracts. Economic issues were important to both groups but significantly
more important to independent producers. The two groups exhibited no difference on
tradition and loyalty issues. Cooperative members emphasized prices and deductions,
but they also highlighted assured markets and field services offered by their cooperatives.